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The Rise of Proactive Customer Care

The Rise of Proactive Customer Care

The Rise of Proactive Customer Care

By Donna Fluss

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Interactive Voice Response (IVR) systems have been around since the 1980s and are still going strong. Investments in self-service applications have accelerated during the past two years, as more enterprises of all sizes are building or enhancing self-service solutions. DMG estimates that the IVR market reached $1.867 billion by the end of 2007, making it the second largest contact center technology segment, trailing only the automatic call distributor (ACD) sector. This market is being driven by strong demand for self-service applications, strong speech recognition capabilities, a steady flow of innovation, the growth of hosted solutions and expansion of the outbound notification/proactive customer care market. Recently, slower IVR growth in the US has been offset by increases in international sales, especially in Brazil, India, Saudi Arabia, Eastern Europe and the Pacific Rim.

IVRs are both strategic and tactical solutions that are mission-critical for a growing number of contact centers around the world. Some customers complain about these automated systems, but the vast majority finds them convenient and easy to use, and has come to depend on them. With the emergence of the proactive customer care market, IVRs are providing additional strategic benefits, as they are making major contributions to revenue generation and are helping to provide an outstanding customer experience.

The Emergence of Outbound IVR (Proactive Notification)

The hosted outbound IVR market, also known as proactive notification solutions, has started to come on strong. New vendors are entering this market, many with verticalized solutions for health care, pharmaceuticals, doctors, dentists, travel, collections, and many other industries. Currently, most of the outbound notification offerings are sold on a hosted or managed service basis, as is the case for all of the vendors listed in Figure 1.

Figure 1: Hosted Outbound IVR Vendors 

Vendor Name

Nuance (Outbound Care)
West Interactive
Source: DMG Consulting LLC, October 2008 

The concept of outbound IVR is not new; it has been used for collections, for example, for many years. Many vendors are now offering packaged solutions that provide tracking and dialing capabilities along with their primary function of leaving an automated message using an IVR. Enterprises have built outbound programs utilizing their ÒinboundÓ IVR platforms for many years. However, as this is seen as just another use for the solution, the premise-based IVR providers do not track this activity separately. As inbound vendors start to offer prepackaged, verticalized applications, they may eventually be track and report the revenue from these solutions separately.

Outbound Legislation Helps to Create the Outbound IVR Market

In 2003, the US Federal Trade Commission (FTC) issued an amendment to the Telemarketing Sales Rule (TSR) for the benefit of consumers. This amendment changed the rule in a way that altered the dialing landscape. The legislation did not kill dialing, as many people had believed it would, but instead established strict guidelines for enterprises to reach out to prospects and customers. Companies are allowed to call customers with whom they have an established relationship and have already conducted business. Most companies had not previously invested in proactive customer care, despite the fact that existing customers are often more receptive than prospects. The legislation changed dialing from a disruptive activity that disturbed many dinners to a relationship-oriented function intended to build and enhance loyalty. It also became the driving force behind the outbound IVR market.

Outbound notification is used for many purposes, including proactive customer care, and when implemented properly, this functionality can help an organization build and enhance customer loyalty and generate incremental revenue. Until August 2008, when 2 amendments were added to the Telemarketing Sales Rule (TSR) to reduce the number of automated nuisance calls, there were few barriers to market entry, thus attracting a rapid influx of new vendors.

DMG Consulting does not expect the new TSR amendments to seriously impede the growth of this market, although it may slow down for a short amount of time while vendors enhance their offerings to address the new requirements. According to these provisions, Òpre-recordedÓ messages can be delivered only to customers who have explicitly given permission and the systems delivering the message must allow customers to opt out. While these provisions require technology enhancements for some of the vendors, they are simply good business practices that should strengthen this market in the long term.

High-Value Uses and Benefits of Outbound Notification

Figure 2 below reflects 22 types of relationship calls. A few of these call types are related to collections and fraud, business necessities that are not pleasant for anyone, but the majority of these uses are intended to enhance relationships with existing customers. Many of the call types also help to reduce the volume of inbound calls to organizations. As depicted in this chart, all of these categories Ð even collections and fraud calls Ð improve a companyÕs profitability and most can improve the customerÕs experience, as well. Of course, how the calls are executed will determine if they achieve their goals.

 Figure 2: Proactive Customer Care Applications
 The Rise of Proactive Customer Care-Figure2
Source: DMG Consulting LLC, January 2009

Enterprises of all sizes, from solo practitioner dental offices to Fortune 100 companies, are using IVRs to cost effectively reach out to their customers. In general, customers welcome these calls, as they have granted implicit permission to be contacted in this way and informed about specific activities Ð such as appointments, sales and travel Ð in which they have an interest.

The Outlook for Outbound Notification

The future for the outbound notification/proactive customer care market is strong. Customers in all types of companies welcome relevant reminders or notifications that enhance their daily life. The outbound IVR market is still relatively new and is just hitting its stride; vendors from many arenas are continuing to enter this market, as the revenue potential is large. Increasingly, the market will see multi-modal outbound notification solutions that can reach customers via their channel of choice. As long as the vendors stay focused on the goal of proactive customer care Ð providing information their customers find helpful Ð this market will grow rapidly over the next three years.

For more information regarding the Interactive Voice Response market, please see DMG ConsultingÕs recently released Worldwide IVR Trends and Market Share Report, at

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